Mexican Hydrocarbon Regulations Keep Foreign Majors Away from Pemex: Analyst
Pemex’s ability to attract high-profile international investors under mixed-production contracts appears constrained by the country’s strict hydrocarbons regulations, according to Gonzalo Monroy, managing director of Mexico City-based energy consultancy GMEC.
The state-owned oil company in August released a list of 21 projects in shallow and deep water and onshore. But it has announced the award of only five contracts, all to domestic companies such as C5M, Geolis, CESIGSA and Petrolera Miahupan. That is less than half of the 11 projects President Claudia Sheinbaum said would be awarded before the end of 2025.
Monroy said the absence of international players such as Chevron or Exxon Mobil, on the list of interested companies is likely the result of language added in March to Mexico’s Hydrocarbons Law that spell out provisions that would typically be negotiated between contracting parties.
“They put themselves in a completely misguided straitjacket,” Monroy said in a recent interview.
Language in the law requires Pemex to hold at least a 40% stake in mixed contracts, while another provision directs that all production be delivered to Pemex for commercialization. In addition, the law requires companies to pay all tax obligations associated with the assignment before they can earn any profits.
“The very serious mistake made by the Sheinbaum administration was precisely putting all of those details into the hydrocarbons law,” Monroy said. “Because they are written into the law, contracts must adhere to those clauses.”
Pemex has said mixed developments are intended to complement the company’s technical, operational, financial or execution capabilities through partnerships. The 21 mixed projects are expected to contribute about 92,000 b/d in 2026, rising to a peak of roughly 450,000 b/d by 2033, according to Pemex’s 2025-2035 strategic plan.
But the first five contracts awarded in December would account for only about 2%of total national oil production between 2028 and 2030. Contract involving more productive fields have yet to be signed.
“For Mexico to secure better and more attractive conditions to draw in other companies, the law will have to be changed,” Monroy said, adding that he doubts such a reform will take place.
Attracting major international players has also become more challenging as President Trump said it intends to bring American oil companies back into Venezuela’s hydrocarbons sector, opening a competing market in which Mexico will likely become the less-attractive option.
“With this contractual rigidity in its mixed contracts, Mexico won’t be able to compete with anyone at all,” Monroy said. “If they couldn’t compete before, now they can even less.”
Reporting by José Luis Adriano, jadriano@opisnet.com